Strategic Business Planning

byTam M. | reviewed 16/07/2024

Learn how to develop a Business Strategy and the process of Strategic Business Planning.

A business strategy describes: the business direction for the future in terms of a vision, strategic themes and a portfolio of planned changes. OGC

The Office of Government Commerce (OGC) Successful

Strategic Business Planning is a critical process that helps organizations navigate their future path. It involves analyzing the current state of the business, setting clear goals, and creating a roadmap to achieve those goals.

The Office of Government Commerce (OGC) Successful Delivery Toolkit defines three stages in developing a business strategy:

business analysis,
identifying the strategic direction for the future and
high-level planning of the implementation of the Business Strategy.

Business Analysis in Strategic Business Planning

Business analysis looks at three areas:

mission and vision,
goals and objectives,
external environment and internal resources.

The company mission statement should state succinctly what it does, its reason for being and its purpose. The Vision Statement should set out the future vision for the company. Get a Vision Statement Template

A well-crafted mission statement provides a clear sense of purpose and direction for the organization. It answers the questions: "What do we do?", "Who do we serve?", and "How do we serve them?". The vision statement, on the other hand, paints a picture of what the organization aspires to become in the future.

Goals and objectives are subtly different. The company's goals usually contain a numerical target and are set at corporate level. They are achieved at a lower level by the meeting of a series of departmental objectives.

Goals are typically broad, long-term aims for the company. Objectives are more specific, measurable steps that the company needs to take to reach its goals. For example, a goal might be "to become the market leader in our industry", while an objective could be "to increase market share by 5% in the next fiscal year".

Consideration of the external environment is crucial in determining the strategy and adapting it over time: the analysis should consider political, economic, social, technological, legislative and environmental factors. Finally the internal resources of the company are reviewed to establish the range and quality of company capacity within the organization.

This comprehensive analysis is often conducted using tools like PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) for external factors and SWOT (Strengths, Weaknesses, Opportunities, Threats) for both internal and external factors. It's crucial to understand both the external landscape and internal capabilities to formulate an effective strategy.

Identifying Strategic Direction

Identifying the company's direction or strategic choice involves the generation and evaluation of options along with a consideration of the company mission, vision, stakeholder expectations and existing competitive advantage.

The generation of options is driven by the challenges facing the organization, which OGC describes as the strategic issues. Options should identify the areas of business activity in which the organization needs to engage in order to meet its challenges.

This stage involves creative thinking and rigorous analysis. Organizations might consider various strategic options such as market penetration, market development, product development, or diversification. The chosen direction should align with the company's core competencies and provide a sustainable competitive advantage.

Planning the delivery of the Business Strategy

The third stage involves high level planning to identify candidates for action (programme of business change) and to develop an implementation plan.

This stage identifies resources and management control requirements, the organization structure required to make the strategy work and analyzes of the impact of the change, the level of expertise for managing the change and the human resources implications.

The outputs of the planning stages produce a strategic plan which contains the strategy statement comprising the mission, vision, goals and objectives, a list of candidates for action and a high level plan of action.

This stage is crucial for turning strategy into action. It involves breaking down the high-level strategy into specific initiatives, projects, and actions. It also considers the resources needed, potential risks, and how progress will be measured. Change management is a key consideration here, as implementing a new strategy often requires significant changes in organizational structure, processes, or culture.

The Business Strategy Development Process

The process involved in a strategy is illustrated in the flow chart below:

Flowchart illustrating the process of developing a business strategy

Flowchart showing the steps in developing a business strategy, starting from strategic issues analysis, leading to strategy formulation, and ending with implementation and strategic control.

Source: OGC, Setting and managing strategic direction.

Text version of the process

Strategic issues - analysis of:
- Environmental opportunities and threats
- Organisational resources and competences
Vision, values, and expectations
Mission
Goals, objectives
Strategy formulation:
- Alternatives
- Evaluation and choice
Strategic themes
Setting the agenda for change
Strategy implementation and high-level planning
Programmes of business change
Policies and procedures
Strategic control (senior management)

The analysis of strategic issues leads to the strategy formulation and is underpinned and directed by the vision, mission, goals and objectives.

The strategy formulation is controlled by senior management and produces the strategic themes leading to an agenda for change, high-level plans and finally the candidates for action (programme of business change).

Existing policies and procedures inform the strategy formulation and the high level planning.

It's important to note that while this process is presented linearly, in practice, it's often iterative. Organizations may need to revisit earlier stages as new information emerges or as the external environment changes. Regular review and adjustment of the strategy is crucial for long-term success.

References and recommended reading on Strategic Business Planning

OGC (Office of Government Commerce) - stakeholder and project management guidance

Lawrie, A., 2014. Business and Strategic Planning for voluntary organizations London: Directory of Social Change.

Katsioloudes, Marios. and Abouhanian, A K,. 2016 The Strategic Planning Process: Understanding Strategy in Global Markets. Abingdon: Routledge